Drug companies to pay 421 million USD for price scam

Dec 07, 2010

Three pharmaceutical companies have agreed to pay 421 million dollars for reporting inflated drug prices to the US government, officials said Tuesday.

The Justice Department said that Abbott Laboratories, Roxane Laboratories, a US-based subsidiary of a German firm, and German drug maker Braun Medical Inc all agreed to pay the fines.

The three companies are accused of artificially inflating the prices of the drugs reimbursed by the federal government under the Medicare and Medicaid health care programs for elderly and low-income Americans.

Tony West, Assistant Attorney General for the Justice Department's Civil Division, said the companies were guilty of "offering their customers one price and then falsely reporting a greatly inflated price to the lists the government uses when determining how much to pay for the drugs," he said.

The fraud led to the government overpaying reimbursements by hundreds of millions of dollars, according to officials.

"Pharmaceutical companies created an incentive for the purchase of their drugs, since buyers could obtain government payment at the inflated price and pocket the difference," said West.

Authorities said, however, that they have recovered the overcharges and more in its settlements with offending companies over the unlawful pricing schemes.

Since January 2009, officials said they have reclaimed more than nine billion dollars in cases alleging false claims -- about half of those funds from fraud related to federal health care programs.

West said the price inflation scams are a drain on government coffers and hurt health programs intended for the sick and elderly.

"Taxpayer-funded kickback schemes like this not only cost federal health care programs millions of dollars, they threaten to undermine the integrity of the choices health care providers make for their patients," he said.

(AP) -- Medicare beneficiaries would receive better drug coverage and a portion of President Barack Obama's health care legislation would be paid for under an emerging agreement involving the pharmaceutical ...

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User comments : 2

Nobody is going to jail ? When a person / company uses their licence to commit fraud USUALLY their ability to work IN that profession is usually removed ? If there is 'insider trading' the man loses his ability to trade ? HOW COME we don't just shut them down for a year or two ? Better YET all their drug income should be DIVERTED to Medicare for that period of time AND somebody ANYBODY goes to jail ? Imho.

"The fraud led to the government overpaying reimbursements by hundreds of millions of dollars, according to officials" this sounds like they arent even paying a fine, just paying back all or part of what they stole. I agree the penalty is not nearly enough. there should be criminal charges envolved and fines should be a multiple of what was stolen since they dont catch all of these crimes. Based on this article it sounds like there is no risk in commiting this sort of fraud, since all you can lose is what you steal!

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